Tuesday, November 29, 2011

Share Buybacks, Part 2

In my last post on share buybacks, I started by breaking down the components of the Powershares Share Buyback Achievers ETF PKW. The fund PKW sports an average PE of 13, a yield of 0.78%, and a beta of 0.98. Over several periods, PKW outperformed SPY (with a bout of slight underperformance recently):

YTD

1 mo

3 mo

1 yr

3 yr

PKW

7.37

10.16

-0.19

13.37

16.53

SPY

1.18

10.85

-2.48

7.94

11.35

Out/underperformance

5.18

-0.69

2.29

5.43

5.18

The relatively high beta is somewhat concerning considering that this ought to be a conservative strategy. Moreover importantly, the AUM is merely 59.65M despite the ETF running for several years. This and low volumes suggest low liquidity. Indeed, earlier this month, the exchange even very briefly halted trading of PKW. But my interest isn't in this ETF itself, but rather the share buyback strategy in abstract. What will be interesting is how the individual components compare and how did the aggregate share buybacks of the components relate to performance. Stay tuned.

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chitika

Disclaimer: I may trade in or out of any of the above names. None of the above should be construed as investment advice. It is only for informational and entertainment purposes. Please consult a qualified financial professional before acting on any financial information.